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Business

Arab Countries Face $22 Billion Hit from New U.S. Tariffs, UN Report Warns

Arab Countries Face $22 Billion Hit from New U.S. Tariffs, UN Report Warns
Web Reporter
April 20, 2025

A sweeping wave of new U.S. tariffs imposed earlier this month could affect up to $22 billion in non-oil exports from Arab countries, with six nations expected to bear the brunt of the disruption, according to a new report by the United Nations Economic and Social Commission for Western Asia (ESCWA).

The tariffs, introduced on April 2, apply a 10% blanket duty on nearly all imports to the U.S., with rates rising to as high as 42% for countries maintaining trade surpluses with Washington. Although oil exports remain exempt, the new rules target a broad range of industrial goods, including fertilizers, textiles, aluminium, and electronics — sectors in which several Arab nations have been expanding their export presence.

Bahrain, Egypt, Jordan, Lebanon, Morocco, and Tunisia are identified as the most directly impacted, with Jordan facing the highest exposure due to its heavy reliance on the U.S. market. The new tariff regime effectively cancels previous trade preferences enjoyed by countries such as Bahrain, Jordan, Morocco, and Oman.

“A country having a higher share of non-oil exports to the United States is expected to be directly impacted,” the report stated. Jordan’s vulnerability is particularly pronounced, with U.S.-bound exports forming a significant portion of its total foreign trade.

The outlook for Arab economies worsened after the U.S. announced on April 9 that a pause in tariff implementation would apply to most countries — excluding China — a move that diminished the chances of trade diversion benefits for Arab exporters.

While nations like Algeria, Oman, Qatar, Saudi Arabia, and the UAE are expected to see limited direct effects due to their lower non-oil exports to the U.S., eleven other Arab countries, including Iraq, Kuwait, Libya, Sudan, and Somalia, are projected to face negligible impact.

ESCWA also warned of broader regional consequences stemming from weakening global demand. The European Union and China — both major buyers of Arab goods — could reduce imports, further dampening export revenues. Tunisia and Morocco, for example, send over two-thirds of their exports to the EU, while China accounts for 22% of GCC oil and chemical purchases.

According to ESCWA’s economic modeling, the Agadir Agreement countries — Egypt, Jordan, Morocco, and Tunisia — could see GDP decline by 0.41%, exports by 1.41%, and investment by 0.38% in 2025. The GCC region, less exposed to U.S. tariffs but more dependent on oil revenues, may see a GDP drop of 0.10%.

Rising global uncertainty is also affecting borrowing costs. Since the April 2 announcement, bond yields have climbed by 36 basis points in Arab middle-income countries and 32 points in the GCC. For Egypt, this translates into $56 million in additional interest payments next year, with Morocco, Jordan, and Tunisia also facing higher costs.

ESCWA urged Arab governments to take coordinated policy action, including deepening regional integration, renegotiating trade agreements, and diversifying economic partnerships to reduce vulnerability.

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